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Friday, April 13, 2012

S'pore needs to be careful about raising wages: Lee Yi Shyan

SINGAPORE: Minister of State for Trade and Industry, Lee Yi Shyan said Singapore must be careful about raising wages without a corresponding increase in productivity.

Mr Lee was responding to media questions about Professor Lim Chong Yah's recent wage restructuring proposal on the sidelines of a community event.

Prof Lim had said a wage revamp is needed to address the issue of growing income inequality.

This includes progressively raising the pay of low income workers and freezing the wages of top earners.

Prof Lim suggested that those earning below S$1,500 a month should have their pay increase by 50 per cent over the next three years, and freezing wages of those earning S$15,000 or more a month, for the same period.

Prof Lim was one of those involved in Singapore's economic restructuring exercise in the late 1970s.

"In a free market system, for it to work well, we have to be very mindful of the interventions we introduce and if you artificially raise it too much... there are consequences and some of these consequences are not what you want to see," said Mr Lee.

"So I think by Prof Lim's proposal, if I understand him correctly... I think this is a very drastic way of raising the wages without corresponding increase in productivity and that will have a wide impact on the economy," he added.